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Trading ends the day better than it started | Wednesday, May 25, 2022

The December 2022 vs. December 2023 corn spread ended the day higher and nearly a dime off the low. July corn was over 15 cents off the low of the day and settled slightly higher on the day. December corn was quietly lower after a volatile day as well. 

Soybean prices settled the day in the red, but were well off the lows scored this morning. July was down 12 cents while November was down a nickel. Wheat prices had the biggest turnaround trade today. July CBOT wheat ended the day 6 cents lower, but that was 34 cents off the low. July KC wheat was down 4 on the day, which was 40 cents off the low. Spring wheat rebounded over 40 cents off the low to settle the day quietly higher.

Grain traders are trying to determine if the risk premium added to the markets over the past few months is enough given the current news. We still have to deal with summer weather in the US. The balance sheets in the US and the world are needing a reprieve from the uncomfortable tightness recently. 

Livestock futures were unable to maintain the stronger open. Feeder cattle were down 27 cents, live cattle were down 60 cents and lean hogs were steady to down $1.37.

Crude oil was able to find some friendly momentum later in the day to push prices toward the top end of the trading range. The oil bulls need to push over last week's high of $113.20 if they are going to ignite another push higher. 

MIDDAY COMMENTS: 12 p.m.

Corn futures are down 8 cents. Soybeans are down 13 to 20 cents, and wheat is down 12 to 20 cents. Many of the grain contracts have recovered half or more of their early session lows. The recent rainfall across Oklahoma might be too late to have a great impact on the winter wheat crop. It could improve the prospects for soybeans though.

Livestock futures have moved to mixed at midday. Feeder cattle are up 57 cents while live cattle are up 35 cents. Lean hog futures have moved lower after a higher start to the day. June hogs are down 70 cents while July is down $1.20.

The U.S. dollar is holding on to the early session gains. The June dollar index futures are up 0.52 at 102.39. Crude oil is up 32 cents at $110.09. Stock market futures are quietly higher in the S&P while the Dow Jones is down slightly.

Natural gas futures pushed over the $9 mark today. The last time we saw futures this high was 2008. Momentum indicators are extremely overbought, but that does not mean prices have to come down.

OPENING COMMENTS: 9:15 a.m.

Traders are looking at improving weather forecasts in the United States and France, contributing to expected better planting progress next week. Corn is down 13 cents. Soybeans are down 17 to 22 cents. CBOT wheat is down 30 cents. KC wheat is down 37 cents, and spring wheat is down 30 cents.

Livestock futures are quietly higher this morning. Feeder cattle are up 60 cents while live cattle are up 17 cents. Lean hogs are 80 cents better in the June contract.

In the outside markets this morning, the U.S. dollar is up 0.40 at 102.27. The low hit yesterday (very close to the 40-day average) in the U.S. dollar –  the lowest level we have traded in a month. Crude oil is up nearly 90 cents this morning at $110.67. 

The stock market volatility over the past two months has likely impacted the money flow in and out of commodities. The charts are trying to form a bottom, but the first real test will be closing over the 20-day average. The S&P 500 futures have not been able to close over this line since April 7. 

For a free trial of The Kluis Report including three times a day market updates and the Saturday newsletter, visit kluiscommodities.com, call 888-345-2855, or email info@kluiscommodityadvisors.com

About the Author: Bob Linneman is a commodities broker with Kluis Commodity Advisors. Linneman grew up on a diverse farm in eastern South Dakota. Between milking cows, managing a beef herd, and farming various crops, he experienced many aspects of agriculture firsthand. After graduating from North Dakota State University with a degree in business, he moved to Hawaii with his wife. There he was an associate portfolio manager for a fixed income firm that managed $2 billion in assets. After nearly two years in Hawaii, he moved back to the Midwest and began his career in commodities. Linneman is licensed as a Series 3 and Series 30 commodity broker.

Editor’s Note: The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance – whether actual or indicated by simulated historical tests of strategies – is not indicative of future results. Trading advice reflects good-faith judgment at a specific time and is subject to change without notice. There is no guarantee the advice given will result in profitable trades.

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